£87 Million Cash Windfall for Kids
Christmas and birthday presents could generate £87 million CTF cash windfall for kidsFamily Investments, the market leader in Child Trust Funds (CTFs), predicts that the first generation of children to benefit from Gordon Brown 's ambitious child trust fund scheme will receive an additional windfall of £87million in eighteen years time, purely from lump sum top ups.
Over 40,000 single top up payments have been paid into CTF accounts run by Family Investments since April 2005, with an average value of £175. By projecting Family 's experience across the whole CTF market, they estimate that £37.5million has already been saved into the funds in lump sums which could create a windfall of £87 million by 2020 - before even the original CTF voucher and other regular payments are taken into account.
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Family and friends are enjoying the flexibility of the CTF scheme by topping up on an ad- hoc basis throughout the year, particularly around Christmas and birthdays. Payments made in the early years can make a huge difference to the fund 's final value, a gift that little ones will benefit from long after Christmas toys and birthday cakes have been forgotten. Family Investments has calculated that the projected return on a CTF that has been topped up with five single payments of £175 in year's one to five is £3,120, compared to a voucher only CTF which would be worth just £1,090 at age eighteen - an almost three-fold (290%) increase in the final value.
With family and friends topping up CTF accounts alongside parents, the scheme 's success in encouraging a savings culture in the UK, particularly for the next generation, is clear. However, 48% of parents would still like CTF providers and the government to do more to actively encourage family and friends to pay into their child 's CTF2. New parents welcome any help from their wider family circle as they wrestle with mortgage and utilities payments whilst getting to grips with the demands of parenthood.
John Reeve, Chief Executive, Family Investments commented:
"Single payments are a flexible way to top up CTF accounts and are an easy way for family and friends to help parents save for their children, particularly during the early years when money can be tight for new families. Making top ups in those early years helps get the CTF off to a good start and ensures that the child benefits from a long period of growth when they turn eighteen."
He added:
"Saving for their grandchildren is a key concern for many grandparents. CTFs are an easy and convenient way to make a significant gift to a grandchild and mitigate inheritance tax at the same time. At Family, we 've made it really easy for people to top up CTFs - anyone can contribute to a child 's account as long as they have access to a telephone, the internet or a post box."
Family Investments offers a Stakeholder CTF managed by leading fund managers, New Star. Parents can find out more about Family 's CTF, or set up an account for their child direct with Family either by phone on 0800 616695, online at www.familyinvestments.co.uk or by post.
 Family has an estimated market share of 20% and £37m assumes comparable top up activity across the market. £87m is the projected growth on £37m over 16 years at 7% and after stakeholder charges. Figures are illustrative and are not guaranteed.
YouGov interviewed a random sample of 264 adults with children eligible to hold CTFs (born on or after 1st Sept 2002) online on 10 - 14th March 2006. Interviews were conducted across the country and results were weighted to the profile of all adults.
About Family Investments
Family Investments is the trading name of Family Assurance Friendly Society - one of the UK's largest Friendly Societies with in excess of £1.6bn funds under management and over 800,000 members
Family Investments is the market leading Child Trust Fund provider with our Child Trust Fund account available in over 18,000 high street locations - four times greater than any other provider. Family's partnerships include the Post Office, Barclays, Sainsbury's Bank, Bounty, Coventry Building Society, Bradford & Bingley, Clydesdale Bank, Northern Bank, Yorkshire Bank, MGM Assurance and Early Learning Centre
In March 2006, Family won a prestigious Parent Friendly Award from the baby charity Tommy's as ' Best Children 's Savings Account ' in recognition of their parent friendly products and services.
Family Investments is authorised and regulated by the Financial Services Authority
September 2006 |
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